The ex-dividend date is a crucial concept for investors interested in dividend-paying stocks. It marks the point in time when a stock’s price adjusts to reflect an upcoming dividend payout. Here’s a breakdown:
- Before the Ex-Dividend Date: If you buy a stock before the ex-dividend date, you’ll be entitled to receive the next dividend payment, regardless of when the company actually distributes it.
- On or After the Ex-Dividend Date: If you purchase a stock on or after the ex-dividend date, you will not receive the upcoming dividend payment. The stock’s price typically falls by an amount roughly equal to the value of the dividend to account for this.
In simpler terms:
Imagine a company is about to give out ₹10 per share as a dividend. On the ex-dividend date, the stock price might drop by around ₹10 to reflect that upcoming payout. Investors who buy the stock after this date won’t get the dividend, as it’s already been factored into the price.